Latecomer Strategy Propels Amazon Local Register, UMD Expert Says

Amazon is great at collecting and analyzing data about its customers, but has little knowledge about their offline purchasing. With Local Register, it can collect additional data about those consumers and use it to influence online and offline promotions.

College Park, Md (PRWEB) August 20, 2014

Amazon's push into a mobile payment space targeting brick-and-mortar merchants with Amazon Local Register means the online retail giant is poised to leverage new insight into offline shoppers, a University of Maryland expert says.

The new product, combining a secure card reader and free mobile app that merchants can use to process credit and debit card payments using smartphones or tablets, competes with the likes of Square and PayPal Here.

Bill Rand, assistant professor of marketing and computer science and director of the Center for Complexity in Business at UMD's Robert H. Smith School of Business, says "Amazon, like its competitors, faces the reality that mobile payment technology is still not widely adopted by both consumers and retailers."

"When factoring in Amazon Payments' full suite of mobile payment solutions, Amazon has entered the niche late, and so it does not have a significant marketing advantage," he says. "However, Amazon can leverage its advantage of knowing more than its mobile payments competition about what its consumers buy. If it can successfully tap into this knowledge to provide the right incentives and promotions for use of mobile payments, it can potentially leapfrog the competition."

A benefit to Amazon, says Rand, is that the mobile payment space is more valuable as a data source than as a revenue stream: "Amazon is great at collecting and analyzing data about its customers, but has little knowledge about their offline purchasing. With Local Register, it can collect additional data about those consumers and use it to influence online and offline promotions.”

Local Register also brings benefits and challenges to merchants.

"Amazon’s strength in information security translates to its lower transaction fee for retailers, and in the long run, Amazon also could provide retailers with analytics about consumers to help improve their operations," Rand says. "A likely hurdle for these businesses is a skills shortage that would hinder leveraging such data. Moreover, as Amazon adds to the number of mobile payment platforms, retailers are increasingly challenged to compare the vendors and select one that best suits them."